Democrats look to fit electric car credits into EPA’s ethanol mandate
Source: By John Siciliano, Washington Examiner • Posted: Monday, August 7, 2017
The Environmental Protection Agency’s renewable fuel mandate could get a whole lot more complicated if Democrats are able to add electric cars to a credit program designed to boost corn ethanol and other liquid biofuels in America’s gasoline supplies.
Electric Renewable Identification Numbers, or e-RINs, would be generated by recharging an electric car using the electricity generated from power plants that burn biogas. Biogas is natural gas derived from rotting waste, manure, and other rotting materials.
On top of the idea of rewarding electric cars for participating in a biofuel program, the problems that could arise from adding a new type of credit to an already problematic ethanol RIN trading system is likely to give heartburn to refiners that are at odds with the Renewable Fuel Standard.
Independent and merchant refiners must buy RINs for the purpose of complying with the EPA’s Renewable Fuel Standard because they don’t have the ability to blend and sell ethanol at the retail level to generate the RINs themselves. That ability is possessed primarily by oil giants such as Shell, BP, and Exxon, which has increased volatility in the RIN market resulting in higher costs for refiners, according to the independent refiners. The higher cost of RINs has driven up the cost for making gasoline and hurt the refiners’ bottom lines.
For the most part, environmentalists like the idea, and even though utilities have liked the idea of rewarding electricity under the RFS, it is not clear if the automakers are at the table in the new discussions about e-RINs.
The e-RIN proposal was floated as an amendment to a bill being negotiated in the Senate that is meant to allow higher blends of ethanol in the nation’s gasoline supply year-round by removing the current restrictions on 15 percent ethanol blends. A number of lawmakers have problems with the issue of E-15 alone without adding electric vehicles to the mix.
E-RINs were on the Democrat amendment list for the planned markup of the E-15 bill that was suddenly scrapped, but that most people tracking the debate say will come back in the fall. Environmentalists are one of the biggest supporters of e-RINs, said a source close to the Trump energy transition team who is tracking the issue.
The advanced biofuel industry is also a big supporter of the proposal because biogas was allowed to be counted toward meeting the RFS’ advanced biofuel targets by the Obama administration, the source said. Refiners have to meet ever-increasing goals of blending corn ethanol, biodiesel, advanced, and cellulosic biofuels into the nation’s fuel supplies.
Because the E-15 bill is expected to come back later this year, conservative organizations are gearing up to mount an offensive against the measure, citing the e-RINs as a big concern, said a top official on the condition that his name not be disclosed.
On the environmental front, electric vehicle RINs are described as being complicated. One group, the Clean Air Task Force, which opposed E-15 and ethanol use, says the problem with using electricity to meet a biofuel standard is the accounting. If the e-RINs amendment seeks to fix the accounting, that would be something they support.
“The problem that we run into on that, which EPA teed up for comment last year, is the way that the counting works,” said Jonathan Lewis with the Clean Air Task Force.
Biogas gets counted one way if it is used it in a vehicle that can burn compressed natural gas. But it is counted differently if the biogas is used to produce electricity by a power plant, and in still another way if used in an electric car.
“The question is if you use it as compressed natural gas in a vehicle, you get to count all the energy content in the compressed natural gas when it’s sold at the retail point,” Lewis said. “If you instead take that natural gas and use it as a feedstock for a power plant and use the electricity that comes out a power plant for an EV, then the amount of energy that’s counted for the RFS purposes is after the gas-to-electricity conversion.”
He said the credit for using biogas should be made equal among all users under the RFS.
Some larger refiners have argued that biogas shouldn’t even be counted as a renewable fuel under the program. The gaseous fuel is not a liquid, for starters. That makes it hard to blend to receive a RIN, officials say. On top of that it can qualify as cellulosic biofuel, which the refiners say it is not.